NATIONAL DIALOGUE SERIES 4:
The
National Dialogue Series continued on Thursday, 11th May 2017 with
the topic: ‘Wetin mek we dea pay tax? (Why
do we pay tax?)’ live on Africa Young Voices Television and simulcast on
the Independent Radio Network across Sierra Leone. This is the fourth in the series and the second on the same topic.
The panelists
were Mrs. Aminata Kelly-Lamin,
Policy and Advocacy Adviser for Action Aid Sierra Leone and Alpha Tanu Jalloh, President of the
Sierra Leone Importers and Exporters Association, while Development
Communications consultant Batilloi Warritay moderated the programme.
Following
are highlights of what the panelists said during the 1hr 30 minutes discussion
programme:
Mrs Aminata Kelly-Lamin was asked about her views on tax
avoidance and she explained that while
it is legal as a result of agreements signed between two countries, tax
avoidance is morally wrong. She went on:
“From a poverty stand-point
Action Aid viewed it as morally wrong. We believe that if you come to our
country to invest and found out that the system is not correct, you should be
honest enough not to follow that system but to uphold international best
practice or standards.
“Tax Avoidance refers to ways companies and multi-national
businesses avoid paying their correct taxes in the various countries they are
operating. Tax Avoidance is making
Sierra Leone losing out on a lot of money which otherwise would go into
providing social services for the general public, especially women and
children.
“In 2016, Action Aid Sierra Leone released a multi-country
report titled Mistreated Report, which looked at the issue of Tax Avoidance
in various countries. The report found out that tax treaties or agreements
between countries is one of the ways companies avoid paying correct taxes. Countries
hosting big businesses or multi-national companies have a right to tax these
companies, but some provisions in the tax treaties restrict the right of host
countries from levying certain taxes. So a lot of countries, especially
lower-level countries like Sierra Leone, are losing out on huge incomes that
would have added to their domestic revenue generation. Bangladesh alone loses
about US$85 million annually to tax avoidance.”
Mrs
Kelly-Lamin said they (Action Aid) shared the
report with the Government of Sierra Leone: the Office of the President, Office
of the Vice President, the Ministry of Finance and Economic Development and the
National Revenue Authority (NRA), who are responsible for taxation in the
country.
“We had hoped that they (Government) would see and
understand the negative impact of some of these kinds of bi-lateral agreements,
for example with the United Kingdom, on the country’s economy. We expected that
there would be the political will to review these treaties.
“Actually, obligation to these tax treaties is
voluntary; they are not absolutely binding. This means that our Government can
come out of them as and when they feel it’s not favourable.
“The Office of the President requested the NRA to
catalogue all treaties of such nature that were preventing Sierra Leone from
generating much needed revenue from taxing multi-national companies but up till
now no list has been made available.”
Mrs
Kelly-Lamin also cited a Network Movement for Justice
and Development (NMJD) study released in 2011, titled ‘Cost Benefit Analysis on Mining
Companies’, which found out that certain mining companies including
London Mining and African Minerals Ltd were avoiding payment of Corporate Tax.
“While this is also not against the law (because it
is usually as a result of tax holiday arrangement between the Government and
the companies), it is morally wrong on the part of the companies.
“This study looked at some of the areas that
Government often overlooked when multi-national companies come in to invest to
determine whether Sierra Leone would benefit or not. In addition, there were
several other tax obligations these companies neglected because Government did
not monitor their operations well.
“In one instance, the
study found out that on the date the agreements were signed the price of iron
ore on the international market did not match with the price Sierra Leone
agreed to sell. This meant that there was reduction in the royalties we were
supposed to get as a country. The royalty is our country’s first entitlement
for its mineral assets, and we lost on that.
“Furthermore, although the Income Tax Act requires
all big companies to pay a Corporate Tax of around 35 to 37% or so, the NMJD study found out that these
mining companies re-negotiated, and London Mining for example was asking for as
low as 6 percent.”
For his part,
Alpha Tanu Jalloh said:
“Because Sierra Leone is a small and poor country, she
gives in to most of such agreements just to encourage big businesses to invest
in the country.
“In our regional set-up, the Mano River Union for
example, we have a treaty that goods or products coming in from any of these
countries should not pay any duty. So you find out that countries that are
manufacturing countries stand to benefit more from such a treaty than our own
country which is receiving the products.
“Some big companies enjoy tax holiday for a period
of 4 to 5 years based on the volume of their investment. These tax breaks are
normally direct taxes to the State for operating a business in the country,
such as Corporate Tax.”
However, Mrs
Kelly-Lamin noted:
“Sometimes some companies abuse this tax holiday privilege.
When they come they get tax holiday for five years, and then another five
years. By the time it’s 10 years they change their names and sign new
agreements and enjoy the benefits all over again. The Government loses out and
it’s us the people who bear the loss in the form of inadequate social services.
“Going forward, Government should enforce existing
laws which are good, and review old treaties with countries like UK, Denmark
and Italy as examples. It is possible that some of the provisions in these
treaties still impact on our agreements with companies from these countries in
recent times. The fact that Sierra Leone signed these treaties means that they
supersede our domestic laws.
“I also suggest we introduce a progressive tax
system, wherein the more income you get the more tax you pay.”
Alpha
Tanu Jalloh suggested that the NRA should spread the
tax net rather than concentrating more on imports.
“The transport sector for example; they just renew
their licenses annually and that’s it. The transport sector should also report
their income and pay taxes to Government. There are so many other areas. There
are shops that are not registered, and there are small outlets that are doing bigger
businesses than shops but they deliberately prefer to remain as such simply
because they don’t want to pay tax. Charcoal sellers, wood sellers, they all make
profits and therefore eligible to pay taxes.”
Meanwhile, Mrs
Kelly-Lamin reasoned:
“The collection of taxes is one thing; the
utilization of tax money is another.
“The State has to prove to the people that they are
using the money for the benefit of the general public. The Auditor General’s
report year in year out has proven that there are many holes in the system in
terms of utilizing public monies. It shows that monies entrusted by the State
to Ministries, Departments and Agencies to provide social services- schools,
hospitals, roads, water, electricity- are not being used correctly.
On the question of newspaper allegation that the
‘NRA chopped tax monies’, Mrs
Kelly-Lamin said: “I can only reference the recent Auditor General’s Report
which claims that there are certain questions which the NRA failed to answer in
relation to money given to them to manage their own affairs. Even the Okada
riders have a right to ask Government how and on what tax monies are spent,
because they pay Le5, 000 as tax to Council.
Asked about his comments on the new Finance Act by a
listener, Alpha Tanue Jalloh said: “The
whole process is shrouded in secrecy. From the Ministry of Finance and Economic
Development, it goes directly to Parliament. We believe there are finance experts
who should have seen this bill and discuss it before it is sent to Parliament,
but that is not the case and this is not the first time. Even with the 2016
Alcohol and Beverages bill; we didn’t know who put it together and how. It just
appeared in Parliament. It’s full of unthinking figures which you can’t see in
a similar bill in any part of the world.”
Links to Action Aid’s ‘Mistreated Report’:
FACT
CHECK:
A 2013 report by BAN and partners NACE, Christian
Aid, IBIS and Tax Justice Network Africa titled ‘Losing Out’ revealed
that Sierra Leone was losing US$ 224 million annually to tax avoidance by just
four mining companies operating in the country.
Did
you know?
Land
Owners Tax requires tenants to pay 10% tax to the Government
from their rents. This tax targets the tenants directly and not the landlords.
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About
the National Dialogue Series:
The National Dialogue Series is a joint initiative of The
Sierra Leone Association of Journalists (SLAJ),
Campaign for Good Governance (CGG)
and the Independent Radio Network (IRN).
The main objective of the programme is to develop a healthy culture of national
discourse on key development and political issues and to shift the focus from
individuals and personalities as the country prepares for national elections.
It
is becoming evidently clear that as Sierra Leone approaches the 2018 Elections,
there is a compelling need to enhance the capacity of citizens in their civic
responsibilities and also help to increase the level of awareness and
understanding of major issues among members of the public.
The
National Dialogue Series come to you in the form of a 1hr 30 minutes live TV
and Radio simulcast bi-weekly programme across the IRN network, TV and social
media nationwide.
The
next topic is ‘We don ready for the 2018 elections? (‘Are we ready for the 2018 elections?’) on Thursday, 25th May, 2017.
Ahmed Sahid Nasralla
National
Secretary General
Sierra
Leone Association of Journalists
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